Vodafone’s £6bn buyout of Spain's Ono sparks UK deal talk

Vodafone today fuelled speculation that its next acquisition could be in the UK, after splashing out £6 billion on Spanish broadband and pay-TV firm Ono as the British mobile giant looks to diversify.

“Vodafone is becoming a very different company to the company it was two years ago,” declared chief executive Vittorio Colao, as he hailed the acquisition of Ono, Spain’s biggest broadband and pay-TV firm.

Colao has been rushing to diversify as phone revenues hit a plateau and customers increasingly look to one telecoms supplier for mobile, broadband, home phone and pay-TV — dubbed a “quad play” of services.

“We are more a unified communications provider, not just a mobile one,” said Colao, reflecting on the impact of the acquisitions he has made outside the mobile sector in the last two years.

The Ono deal follows Colao’s €7.7 billion (£6.6 billion) purchase of German cable and pay-TV firm Kabel Deutschland last year — Vodafone’s biggest acquisition since before the credit crunch — and the £1 billion takeover of British fixed-line broadband firm Cable & Wireless Worldwide in 2012.

Analysts from Espirito Santo said Vodafone could be “planning to make acquisitions elsewhere in Europe, including the UK”.

Colao is also building fibre broadband networks in Portugal and Italy as part of Vodafone’s expansion into broadband and TV in those markets, and he said that showed he was willing to invest organically as well as acquire businesses. He played down speculation about an imminent takeover move in the UK.

The next chapter in Vodafone’s history is “not just an M&A chapter”, insisted Colao, pictured, who has money for acquisitions, even after returning £50 billion to shareholders following its £81 billion Verizon Wireless sale. Hes ruled out a bid for ITV, which has been mooted by analysts and also confirmed Vodafone was “not in the bidding process” for Channel 5.

Analysts suggest Colao could be more likely to buy telecoms provider TalkTalk or strike a deeper partnership with BSkyB, which already has a deal to let Vodafone customers access Sky Sports’ mobile clips. Vodafone only offers mobile in Britain, plus fixed-line broadband for enterprise customers, and sells no home phone or TV services.

Colao said Vodafone has no need to start offering a quad play, even though he is doing so in Germany, Spain and Portugal. “For the time being, the UK is not a quad play market. Every market is different.”

Vodafone gains 1.9 million customers from Ono and reckons it can sell more services as the Spanish firm’s network already “passes by” seven million homes. The British firm is paying a multiple of 7.5 times last year’s profits for Ono. Morgan Stanley and boutique firm Robertson Robey, set up ex-Goldman banker Sir Simon Robertson and former Morgan Stanley banker Simon Robey, advised.